Philip Hammond, Theresa May’s new Chancellor, should follow the Bank of England’s lead and act to shore up house prices and keep sales markets moving by slashing or temporarily suspending stamp duty.
The Bank’s Governor Mark Carney has already lifted capital requirement restrictions on British banks in the wake of last month’s Brexit vote. The Monetary Policy Committee (MPC) may also cut interest rates to encourage growth and investment, so the onus is now on the Chancellor to follow suit, and property experts hope steps could be taken to ease “punishing” property taxation, by reducing the rate or offering a stamp duty “holiday” to incentivise buyers and investors and bolster confidence.
Guy Gittins, Sales Director at Chestertons, says: “Our new Chancellor says he wants ‘rising prosperity for the great bulk of people in the UK’, but this will not be possible if home ownership remains an unaffordable dream for many, or if the sales market stalls and houses slip backwards, as RICS recently forecast looks likely to happen, especially in London.
Gittins adds: “Mark Carney’s recent announcements contained good news for homeowners and buyers alike. By easing mortgage liquidity he is trying to keep the house market moving and prevent prices slumping. The MPC cutting the base rate of interest would also be a welcome move for mortgaged buyers and owners, and by reducing or temporarily removing punishingly high stamp duty the new Chancellor can ensure the housing market isn’t going to ‘seize up’, while at the same time making ownership more affordable for buyers, particularly in London.”
Chestertons’ Head of Research Nick Barnes comments: “The past few Budget announcements have seen stamp duty changes that were supposed to ‘level the playing field’ by pricing out buy-to-let landlords and overseas investors. In reality the changes were little more than a series of heavy-handed attempt to cool the market, and the consequences were in fact the exact opposite of what was intended. Overseas buyers are in a strong position thanks to the cheap pound, while buy-to-let landlords snapped up homes in the most popular locations to beat April’s 3% stamp duty surcharge.
Barnes continues: “In the post-Brexit environment the housing market mustn’t be allowed to stall and it’s clear Mr Carney recognises this. The ball is now in the Chancellor’s court and an overhaul of stamp duty must be a top priority. He should also scrap the planned withdrawal of landlords’ mortgage interest tax relief. Mr Carney sees the danger posed by buy-to-let landlords ‘abandoning’ the market; it’s to be hoped the new Chancellor will also recognise this and act accordingly.”